PHA 361 - Insurance Refresher L8

What is health insurance?

Protection against unexpected medical costs through payment of insurance premiums.

What is a premium?

Specified monthly payment made to an insurer for coverage.

What is a copayment (copay)?

A fixed dollar amount paid directly to a provider at the time of service.

What is coinsurance?

A percentage of healthcare costs paid by the insured after the deductible is met.

Common coinsurance split

20% patient and 80% insurer.

What is a deductible?

The amount an insured must pay out-of-pocket before insurance begins paying for covered services.

What is an out-of-pocket limit (stop-loss)?

The maximum amount an insured must spend out-of-pocket before the insurer pays 100% of covered costs.

Why do people purchase health insurance?

To protect themselves from unexpected medical expenses.

What is cost sharing?

The portion of healthcare costs paid by the patient through deductibles, copays, or coinsurance.

Cycle without health insurance

Uninsured consumer cannot afford doctor → delays care/goes to ER → cannot pay → providers shift costs to insurers → insurers shift costs to consumers → consumers drop coverage due to high cost and become uninsured.

What are the two broad categories of health insurance?

Public insurance and private insurance.

Examples of public insurance

Medicaid, Medicare, and other public programs.

Examples of private insurance

Employer-sponsored plans, individual plans, and exchanges.

What does HMO stand for?

Health Maintenance Organization.

HMO characteristics

Requires a PCP, referrals often needed for specialists, no out-of-network coverage except emergencies, lower premiums and out-of-pocket costs.

HMO phrase from lecture

"Everything done in house."

What does PCP stand for?

Primary Care Physician.

Role of a PCP in an HMO

Coordinates healthcare and serves as first point of contact.

What does PPO stand for?

Preferred Provider Organization.

PPO characteristics

Network of providers that agree to provide healthcare services at reduced rates.

What does EPO stand for?

Exclusive Provider Organization.

EPO characteristics

Exclusive provider network, may require referrals, no out-of-network coverage except emergencies.

EPO advantage

Allows an individual to have a broader network than an HMO.

What does POS stand for?

Point-of-Service Plan.

POS characteristics

Requires PCP, may require referrals, allows out-of-network care at higher cost.

Why is a POS plan typically more expensive?

Because it allows access to a larger provider network and out-of-network services.

Factors to consider when choosing a health plan

Deductible, out-of-pocket maximum, coinsurance, copays, prescription coverage, PCP requirements, and provider network.

What is a formulary?

A list of drugs covered by an insurance plan.

Why should patients use formulary drugs?

They generally cost less than non-formulary drugs.

What happens if a drug is not on the formulary?

The patient may have to pay full price unless granted a formulary exception.

Why do generic drugs often cost less?

They are usually placed in lower formulary tiers and have lower negotiated prices.

Tier 1 drugs

Preferred generic drugs.

Tier 2 drugs

Generic drugs.

Tier 3 drugs

Preferred brand drugs and select insulin drugs.

Tier 4 drugs

Non-preferred drugs.

Tier 5 drugs

Specialty drugs.

Which drug tier generally has the lowest cost?

Tier 1.

Which drug tier generally has the highest cost?

Tier 5.

What does PBM stand for?

Pharmacy Benefit Manager.

Role of a PBM

Middleman between health plans, pharmacies, wholesalers, and pharmaceutical manufacturers.

PBM reform: Greater transparency around rebates

Requires more information about rebates received by PBMs.

PBM reform: Ban spread pricing

Prevents PBMs from charging payers more than they reimburse pharmacies.

What is spread pricing?

When a PBM charges more for a drug than it pays the pharmacy.

PBM reform: Pass through rebates

Requires PBMs to pass rebate savings to payers or patients.

What happens to medication costs with a high deductible health plan?

The patient pays more out-of-pocket until the deductible is met.

Platinum insurance tier

Highest premium, lowest out-of-pocket costs; insurer pays 90%.

Patient share under Platinum plan

10%.

Gold insurance tier

High premium, low healthcare costs; insurer pays 80%.

Patient share under Gold plan

20%.

Silver insurance tier

Moderate premium and moderate healthcare costs; insurer pays 70%.

Patient share under Silver plan

30%.

Bronze insurance tier

Lowest premium, highest healthcare costs when care is needed; insurer pays 60%.

Patient share under Bronze plan

40%.

Which insurance tier has the highest monthly premium?

Platinum.

Which insurance tier has the lowest monthly premium?

Bronze.

Which insurance tier is best for people who use healthcare frequently?

Platinum.

Which insurance tier is designed mainly for protection against worst-case medical scenarios?

Bronze.

What information is commonly found on an insurance card?

Member ID, group number, BIN, PCN, plan information, copays, deductible, and dependent information.

What is RxBIN?

A routing number used to identify the pharmacy claims processor.

What is RxPCN?

Processor Control Number used to route prescription claims.

What is RxGRP?

Group number used to identify a specific insurance group.

What is a member ID?

A unique number used to identify an insured individual.

Why should demographic data not be generalized when discussing insurance coverage?

A demographic characteristic does not automatically determine whether someone is insured or uninsured.